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Use FSA Funds Before Year-End or Lose Them!
15 Dec
Summary
- Nearly $3 billion in FSA funds are forfeited annually due to lack of awareness.
- FSA funds can cover co-pays, deductibles, and eligible medical items.
- Some employers offer rollovers up to $660 or a grace period for spending FSA funds.
As the year draws to a close, individuals with health care Flexible Spending Accounts (FSAs) must prioritize spending their remaining funds to avoid forfeiture. An estimated $3 billion in FSA money is lost annually simply because account holders are unaware of their year-end deadlines. It is crucial for individuals to review their FSA balances and plan for the use of these funds on qualified expenses before December 31st.
Understanding specific employer plan rules is essential. Some companies permit a rollover of unused funds into the next year, with a maximum of $660 allowed for 2025. Alternatively, employers might provide a grace period, typically extending the spending deadline by two and a half months past the plan year's end. Employers typically offer only one of these options, not both.
Eligible expenses can cover oneself, a spouse, or dependents, encompassing co-pays, deductibles, and many common health items like cold and flu medications. In certain situations, even medical-related travel expenses may qualify. If a gym membership is considered for health reasons, it can be eligible with a doctor's note of medical necessity. For those with excess funds, adjusting future contributions is recommended.
